Increasingly, the role of non-executive board leader is viewed as the linchpin of a successful board and CEO relationship, and while a series of best practices have begun to emerge regarding how to leverage the non-executive board leader role, board leader compensation is one area in which there is a notable lack of consensus. In our recently released Korn/Ferry Market Cap 100 board study, we found that even among the 88 boards that do not rotate the leadership role, 40 percent provide no additional cash retainer for the independent board leader. Of those that do, the amount varies widely, from a median of $87,000 for those designated non-executive chairmen to a median of $25,000 for lead directors and $17,500 for presiding directors. Only a few companies are still debating the question of paying additional equity.

Left to right: Dennis Carey and Stephen P. Mader

Compensation is a symbol of how board leaders are valued by the board.

Serving as the independent board leader of a large public company board is often a highly demanding and time-consuming proposition, and those who take on this responsibility are likely to be among the most experienced and respected directors on a board. It is not easy to find someone with the right combination of personal and professional skills and experience, as well as the motivation required to take on this job. And while board leaders do not serve for the money, the fairness of compensation is a symbol of how the role is valued on a board.

We see three current approaches to board leader compensation:

1. Pay the board leader like any other director. Some boards pay no premium and regularly rotate the role. This sends a message that all directors are equal, but is an indication that these boards may not fully recognize the value of the board leadership role, as a leader among peers and a regular liaison with the CEO. Moreover, in our view, it is unfair—and likely to be perceived as such—not to properly compensate the board leader for assuming these additional duties.
2. Pay the board leader on a par with key committee chairs. This approach recognizes that some additional effort is expended and value contributed but, if the role is fully leveraged, it misses the point that serving as board leader may require significantly greater effort than serving as a committee chair. This demands that an effort be made to delineate what is required to perform the role well, the time and effort that it requires and the role’s effect on board performance.
3. Dramatically increase board leader pay, in line with significant responsibilities. To appropriately compensate board leaders, given their stepped-up time commitment and duties, many boards are eschewing old formulas for board compensation and applying one specifically geared to the board leader role.

Depending on specific circumstances and responsibilities, it may be appropriate for the independent board leader to be paid substantially more, as is now being done with some non-executive chairmen in companies such as Walgreens, UnitedHealth Group and Intel. And, while the title of lead or presiding director may appear less lofty than a non-executive chairman title, we have seen little difference in the actual role, regardless of the title. We believe that the third approach is the way of the future when it comes to compensating independent board leaders. Boards seeking to attract and retain the best directors will factor in the wealth of experience a board leader brings, as well as the complex and sensitive role he or she plays as facilitator, board ambassador and coach and confidant to the CEO. Board leaders themselves will likely feel that they are not in a position to advocate for their own compensation, so it is the full board’s responsibility to ensure that compensation for non-executive board leaders is commensurate with their proportionately greater responsibilities.

Dennis Carey and Stephen P. Mader are vice chairmen at Korn/Ferry International.

In recent months at Korn/Ferry International, we have seen a significant shift among forward-thinking boards that reflects an evolution of the role. They no longer are appointing a board leader merely to satisfy requirements; they seek to leverage the role for maximum benefit.

For leading boards, appointing an independent board leader means far more than simply ticking the “yes” box on a compliance checklist. They recognize that the right board leader—one selected according to a competency-driven process tailored to the needs of the specific board —can add significant value to the board. And they understand the paramount importance of the right “chemistry” with both the board and the chief executive, since this individual is simultaneously a member of the board team and a sounding board for and confidant to the CEO. It is a role that not everyone can perform well, and finding the right match is critical to overall board effectiveness.

In 2009, Delphi Chairman Jack Krol and I convened a roundtable of 10 non-executive chairmen/lead/presiding directors of some of the most prestigious companies in the U.S., including Johnson & Johnson, Pfizer, UTC, Tyco International, Motorola, Ingersoll-Rand, NCR, Ford Motor Co., Comcast and Home Depot. We asked participants to identify some best practices related to the increasingly visible and important role of lead director. The chief conclusions:

• Assume the worst. The period during which the board leader serves may be one of rough going or smooth sailing, but all board leaders must be capable of dealing effectively with the most challenging scenarios. A board should operate under the assumption that it will have to deal with at least one crisis, and select its
  leader with that criterion in mind.
• Create a formal position and candidate specification. The spec should define the role and responsibilities, such as chairing executive sessions and board meetings; presiding over the board evaluation process; and ensuring a robust succession plan is in place for the CEO, key managers and the board itself.
• Make sure it’s personal. It is the hard-to-quantify personal characteristics that make the difference between competent and great board leadership. Always assess factors such as the commitment and skill required to engage other directors in discussion and convey their views; stature as well as social and diplomatic skills; the ability to build trust and provide honest counsel to both board members and management; and unassailable professional integrity and an expectation of the same from fellow directors and management.
• Be thoughtful about term limits. Views on the appropriate term for a board diverge, but the term should be defined with explicit performance requirements. A three-year, renewable term provides the board leader time to demonstrate progress against those objectives and ensures some performance assessment by the board at the end of the leader’s first term.
• Don’t under-compensate. Board leaders have special responsibilities, which require additional time and effort compared with other board members, and provide additional value. Therefore, some boards are considering significantly increasing both the cash retainer—up to double the customary—and equity component of board leader compensation.

The independent board leader is simultaneously a member of the board team and a sounding board for and confidant to the CEO.

While initially driven by requirements designed to ensure board independence, the board leader position is now recognized as a potential source of value. Consequently, the role is evolving into a highly professional one with best practices for selection, compensation and succession coming into focus.

A great board leader can contribute mightily to forging an effective team of directors and is the best insurance a board can have when the inevitable crisis hits.

Dennis Carey is vice chairman, Board & CEO Services, for Korn/Ferry International.

“There’s a consensus among the nation’s top recruiters that the worst is over for the executive employment market,” says Mark Anderson, president and chief economist of ExecuNet.  “We’re already seeing an uptick in hiring, as companies look to improve their management teams with a quality of talent that wasn’t readily available in recent years.”

In the short-term, recruiters reached a 12-month high as 27 percent expect that the executive employment market will improve during the next three months, up from 24 percent in August.

“Any increase in six-figure job growth is good news for executives, but clearly, finding these opportunities will be more challenging than it was before the recession,” added Anderson.  “Companies are less likely to advertise openings in this environment given the sheer volume of talent in the market and their focus on improving existing leadership teams.  This means infiltrating the hidden job market will be more important than ever before.”

If the job of finding great new directors is difficult, so is the job of sitting on a board, especially for the first time. Here is some common-sense advice for new directors. First, and most importantly, remember that directors direct and managements manage.

Why Serve?
Understand why you choose to serve and embrace it. In earlier times, directors often served for prestige, compensation, and fellowship, and their performance rarely was challenged. Those halcyon days are gone. You now must consider reputational risk, substantially expanded (and often last-minute) time commitments—perhaps at little per diem pay—and a more formal environment (which can impinge on candid strategic focus). Do due diligence on the company and its industry, as you will be judged in the court of public opinion—and perhaps even in the courthouse. You’ll need courage, good business instincts, and the rare ability to judge others accurately.

Directors must exercise due care in decision making and need, as much as possible, to ensure that the information they receive is accurate, complete, timely, and verifiable.

Reliance on Outside Advisors
As a matter of corporate law, directors are generally entitled to rely on advice from outside advisors, including compensation consultants. Directors should exercise care in selecting experts and shouldn’t hesitate to question those experts as much as necessary.

We recommend that the following be adopted as standard best practice for directors:

1. Audit Committees should meet regularly with supervisory partners of their firm’s auditors, not just the audit partner, and should require that the auditors disclose conflicts and disagreements about accounting matters and the consequences thereof. Auditors already disclose conflicts with management and “opinion-shopping”, but directors need to understand the “close calls” that accountants are making.

2. Compensation Committees should focus more on actual performance and on compensation expected under different scenarios, and less on consultants’ standard pitches on comparables.  Rewards for performance must be based on realistic goals, taking into account the environment and the factors management controls. In general, paying annual bonuses for performance only relative to an earnings budget should be avoided (because management controls the budget) and relative to peers’ stock performance equally (because management doesn’t control either its own or peers’ stock prices). Further, mark-to-market accounting of financial investments, determination of pension liabilities, and other key P&L components can be manipulated to affect reported profits and compensation. True operating cash flow, and performance relative to competitors, while also not perfect, are worth considering as performance measures. Proper use of deferred payouts tied to actual realizations will go a long way towards realigning managements’ and stockholders’ interests.

3. Boards should receive regular presentations from outside counsel about important trends and cases in corporate law, especially those affecting their duties and their liability. In addition, directors should be assured on a regular basis that each of their primary law firms has brought forward any legal or ethical concerns.

Board Oversight
It goes without saying that boards should focus on economic and financial scenarios covering the full gamut of assumptions. In the current environment, liquidity is a key concern. At other times, expansion or strategic transactions may play a larger role.

Management will always control the flow of information, and even deeply engaged boards will be on the losing end of an asymmetry of knowledge. But directors must exercise due care in decision making and need, as much as possible, to ensure that the information they receive is accurate, complete, timely, and verifiable.

We offer the following suggestions to mitigate, at least partially, the inherent disadvantage directors face due to this asymmetry.

First, ensure that management provides access to, and explanations about, competitors’ performance. Detailed understanding of relative competitive assessment of revenue growth, operating margin, employee turnover, customer satisfaction, and pricing policies will be far more useful than reiteration of historical financials or unsupported projections. Rating agencies face conflicts and their work cannot always be relied on (in any case, ratings often lag reality), and securities research can be superficial and dominated by management or employers. Spend time finding out how the firm is really doing.

Second, create and exploit opportunities to engage informally with employees at all levels of the organization. Plant managers, sales staff, and human resource middle managers, for example, will have a less edited view of how the business is going than you will hear at board meetings.

Third, make sure senior management regularly reinforces the responsibility, under a code of conduct or ethics policy, for every employee to notify an outside board member, anonymously or not, of any planned or known misconduct, whether financial fraud, Foreign Corrupt Practices Act payments, improper behavior, or other improper actions. The purpose of this “honor code” is to give directors more eyes and ears.

Fourth, make sure board meetings include enough time for the independent directors to reflect in executive session on the reports they have received and to raise questions for later follow-up.

It is important for directors to have a good working relationship with management, and, at the same time, one that permits directors to exercise their responsibilities. This relationship best can be described as one with “healthy tension.” Directors and management need to understand that asking probing questions is not done out of suspicion: Sometimes judgments of senior management are just wrong, and directors must press their questions, no matter how uncomfortable this becomes.

Knowing Good from Bad
There is no perfect system for identifying a CEO who lacks honesty, integrity, or capacity. Just as a board needs to know the physical health of top officers, however, it also should (subject to reasonable limits on privacy) understand their financial health, and, as much as possible, their values. Financial circumstances, especially excess leverage, sometimes force desperate people to take improper steps.

One tip after years of experience: In addition to probing executives’ financial health, if a CEO regularly requests less compensation than his/her compensation committee would have awarded, that CEO is less likely to get the company into trouble via excessive risk taking or fraud.

Good luck to all new board members, and, remember, selecting a good CEO and helping him or her achieve the goals set by the board is one of your most important jobs.

Herbert S. Winokur is managing general partner of Capricorn Holdings and has been a director of numerous public companies.

The board of directors of Target Corp., for example, which won a bitter proxy battle against Pershing Square Capital Management earlier this year, have just approved amendments to its articles of incorporation that would end its staggered board beginning with the 2011 shareholders’ meeting.

Staggered boards came to prominence largely as a defense against unwanted takeover bids. With a staggered board of directors—sometimes referred to as a classified board—shareholders elect three or four directors each year in a class, most often for a term of three years, making hostile takeover attempts more difficult.

By staggering the election of directors, hostile bidders face more than one proxy fight to gain control of the target firm. Particularly when combined with a poison pill, the staggered board makes for potent defense against an unwelcome takeover.

In theory, staggered boards offer benefits to shareholders when compared with unitary boards, including greater stability, greater independence for outside directors, and a longer term perspective, all things shareholders should want, too, according to Guhan Subramanian, a professor of business and law at Harvard, writing in The New York Times. Also, because companies increasingly require that board candidates win a majority of votes cast, directors would seemingly value the right to face election every three years, rather than every year. It is not unusual in Europe, for example, for shareholders to elect directors to six-year terms but retain the right to remove them from office at any time.

Yet opponents of staggered boards find them less accountable to shareholders and a breeding ground for a fraternal atmosphere inside the boardroom that serves to protect the interests of management more than those of shareholders. Furthermore, they contend that unitary boards are stable as well, because the vast majority of board elections are uncontested.

The central argument of institutional investors and other opponents of staggered boards, however, is that staggered boards rob shareholders of the economic benefit of hostile takeovers. The facts support them.

According to a study conducted by three Harvard University professors, including Subramanian, and published in the Stanford Law Review in 2002, in the nine months following a hostile takeover bid, shares of companies with staggered boards increased 31.8 percent, compared to an average of 43.4 percent at companies with unitary boards.

Although hostile takeovers remain rare, the fact remains that shareholders elect directors to represent their interests. If staggered boards deter takeovers, or lessen the premiums paid for shares as a result of takeovers, staggering the board creates a conflict between the board and the shareholders it represents.

Another study by Harvard and Wharton professors examined how 24 governance mechanisms affect shareholder value. The study found that governance mechanisms that strengthen shareholder rights tend to improve share price, while mechanisms favoring management, including staggered boards, and tend to erode value.

So, perhaps not surprisingly, under pressure from institutional investors, there has been a tremendous decrease in the percentage of companies with staggered boards. Among the Standard & Poor’s 500, for example, only 34 percent have a classified board. According to RiskMetrics, 79 publicly traded companies themselves placed declassification resolutions on their ballots in 2008. There were 54 company-sponsored proposals in 2007 and 72 in 2006.

This year saw more of the same.

• In April, Brocade Communications shareowners supported proposals by California’s two largest pensions to do away with the company’s supermajority vote requirement and to elect all directors annually. Leading proxy advisors—RiskMetrics Group, Glass Lewis & Company and Egan-Jones Proxy Services—had all recommended that Brocade shareholders support CalSTRS and CALPERS over management.

• This June, shareholders of the luxury retailer Saks voted to put directors up for election annually in a move to make the board of the struggling retailer more accountable. Shareholders also voted for a proposal that required directors to receive a majority of votes to be elected, rather than a plurality.

• McGraw-Hill fended off an unsolicited bid from American Express in the late 1970s in a much publicized battle, and in the mid-1980s, the company’s shareholders adopted a staggered board and other takeover defenses.

In recent years, a McGraw-Hill shareholder doggedly proposed that the company eliminate its staggered board, and in its proxy statement just this past March, McGraw-Hill urged shareholders to vote against the measure. The proxy argued that the staggered board “increased board stability” and “enhanced the ability to protect shareholder value in a potential takeover.” However, within months, McGraw-Hill reversed course. It has now recommended that shareholders eliminate the staggered board at next year’s annual meeting.

But if Senator Charles E. Schumer has his way, the jig’s up. Legislation that he introduced in May would kill staggered boards forever. He introduced a “shareholder bill of rights” which would give shareholders a “say on pay” and would require that the positions of chairman and chief executive be separated at publicly traded companies. Sen. Schumer’s bill would require that corporate directors receive at least 50 percent of shareholder votes in order to remain on the board and ban staggered boards.

With or without Sen. Schumer’s bill, the number of companies with staggered boards will continue to decline, and for the companies that retain staggered boards, the pressures for “reform” can only mount. Yet managing that transition to a unitary board may also prove difficult.

It will be important, for example, to make certain that the company has done everything it can to create value for shareholders. Companies that have significantly underperformed the market or their peers will be more vulnerable.

Up until 2006, for example, the board of Anheuser-Busch was staggered, with one-third of the directors up for election each year. In response to shareholder pressure, Anheuser-Busch amended its certificate of incorporation to de-stagger the Anheuser board and provide for election of all directors each year. Anheuser-Busch was in the midst of this process when InBev announced its bid. Given the high price offered, and Anheuser-Busch’s poor historical performance, it was game over.

Since resolutions to de-stagger boards often seems to be linked with a requirement that directors receive a majority of shareholder votes, the value created by the board and its individual members must be readily discernable to outsiders.

In personal experience, as a meeting of a CEO search committee broke up, one of the directors turned plaintively to his peers and asked if any other director had less than 50 percent of the votes from the proxies received. The chairman told him, “No, everyone else has at least 60-some percent,” and turned away. It was sad to see the director fumble with his papers as he tried to regain dignity and the embarrassment of the other directors as they tried to shift the conversation. It was awkward for everyone in that room.

The NYSE requires that the boards of all listed companies evaluate performance annually. Yet as recently as 2006, only about one-quarter of public boards had instituted any systematic review of director performance.

The importance of maintaining positive working relationships in the boardroom makes it difficult for most boards to address poor performance. Unfortunately, with the advent of majority voting, reviews of director performance will take place in public with investors axing directors who seem unlikely to foster shareholder value.

Considering the stature of most directors, the prospect of delivering a rebuke is unpleasant. However, from everyone’s perspective, that’s better done quietly than publicly.

Gregory T. Carrott is managing director at Cavoure, a Chicago-based executive recruitment firm.

For many years HR executives sought a seat at the table with senior management. Today the HR profession has stepped up, and in most corporations HR has a seat at the table. It is hard to imagine a Fortune 1000 company where the top HR executive is not on the executive management committee or operating committee of the company. HR’s value is being recognized by some of the best companies whose top HR executives have risen to be one of the five named officers in the firm’s proxy statement. With total compensation packages for the senior HR executives at these firms topping over $4 million a year, it is clear that CEOs and boards have understood that effective HR is critical to business success and the HR voice is an important one at the company’s senior management table.

According to the NACD the top three issues for public company boards have remained the same over the past three years: strategic planning and oversight, corporate performance and valuation, and CEO succession. It is easy to see that many of these board issues have people implications as do some of the major responsibilities of boards.

While HR representation as a key member of the senior management team has become accepted practice today, there is surprisingly few HR executives adding value as members of corporate boards. Research presented at last year’s annual conference of the National Association of Corporate Directors (NACD), revealed that less than 2 percent of all director seats are filled with executives with an HR background. In fact Julie Daum, who heads Spencer Stuart’s corporate practice, has said that she estimates that the percentage of HR executives on S&P 500 boards is “minuscule.” There are a number of reasons for this lack of representation of HR on the board, but the point is that HR should have a seat at the board of directors table.

HR Proves its Worth
As a function, HR has clearly earned and retained a seat at the senior management table by adding value and making significant contributions that are recognized by the senior management team and the organization. To earn a seat at the boardroom table, the contributions made by HR executives must earn the same high level of recognition and esteem from board members as they have earned from their corporations. In the current business climate, boards are spending increased time and energy on a host of HR related issues, from CEO succession planning and executive compensation to managing large-scale layoffs and off-shoring without losing key talent and damaging the culture and reputation of the firm. This current difficult business climate presents a unique opportunity for exceptional HR executives to prove their worth at the board level.

Boards typically average 50 to 70 hours of face time together in a year. With so little time together all board discussions must be meaningful and productive to the organization. At board meetings today directors want to have an intelligent discussion on major issues rather than presentations of material sent to them prior to the board meeting. It is the dialogue and the important decisions that follow that are critically important.

One of the most important roles of the board, if not the most important one, is to make sure that there is a competent management team in place to manage the company’s business. Evaluating the performance and results achieved by the senior management team, especially the CEO, is probably the most critical responsibility of board members. When necessary, replacing and naming a new CEO is one of the key responsibilities shared by all board members. This means that the board has to be the driver of CEO succession planning. Attracting, retaining, and motivating CEOs through up-to-date, attractive yet reasonable compensation philosophies and plans is another key full board responsibility, even though the board compensation committee will study this and make recommendations to the full board for action and approval.  While the board provides advice to the CEO in many areas, the board is responsible for making sure the company has a strategic direction, approving financial plans and results, major acquisitions and divestments, dividends and stock buybacks, compliance, risk and crisis oversight, and corporate governance. According to the NACD the top three issues for public company boards have remained the same over the past three years: strategic planning and oversight, corporate performance and valuation, and CEO succession. It is easy to see that many of these board issues have people implications as do some of the major responsibilities of boards.

It is obvious that board members’ responsibilities have grown significantly in the past few years as has the scrutiny of board actions by shareholders, especially in the area of executive compensation. This has been making headlines almost every day for TARP companies. To help boards deal with this intense pressure for board governance and excellence, board committees are spending more time meeting and taking on bigger roles. Two very important board committees are the audit committee and the compensation or human resources committee as some companies call them. This is certainly not meant to diminish the important roles other board committees play in corporate governance. Since Sarbanes-Oxley was enacted in 2002, the oversight responsibilities of the audit committee members have greatly increased. In fact, a SOX requirement is that at least one member of the audit committee have a finance background. There is no such requirement that the compensation committee have at least one member of the committee with a compensation or HR background, yet the responsibilities of the HR committee have also greatly increased.

One of the most important roles of the board, if not the most important one, is to make sure that there is a competent management team in place to manage the company’s business. Evaluating the performance and results achieved by the senior management team, especially the CEO, is probably the most critical responsibility of board members.

Most directors today come from the ranks of CEOs, whether active or retired. However, there are now consultants and head-hunters, including those at Heidrick & Struggles and Spencer Stuart, two of the leading board search firms,  who believe that the assumption that CEO-level generalists continue to make the best directors may no longer be true. The big picture and general broad experiences of CEOs may not be enough to equip board members with what they need to guide the organization through increasingly complex and nuanced issues in some areas. From this perspective, two functional areas of expertise that should be represented on the board are finance and human resources.

While having financial expertise at the board level seems obvious, why HR? Because to be successful, companies must strategically manage compensation, succession, talent and talent development, labor relations, global operations, ethics, culture and integration of acquisitions, and change, just to mention the short list. Top performing companies never lose sight of the importance of these people-related management issues. CEOs, CFOs or other generalists or functional experts outside of HR can’t provide the strategic focus and oversight needed. Asking the right questions and providing the necessary leadership on discussions of these topics/issues in the boardroom requires a deep HR background. Similar to auditing, finance or law, mastery of HR management requires many years of senior-level HR job experience, including working closely with the HR committee of the board. Only after a successful career of such experiences does a person have the required HR skill sets for dealing with all of the people-related topics that are increasingly capturing board attention, e.g. managing CEO succession, compensation, change, organizational culture and global operations.

The Importance of Human Capital
How many times over the years have we heard that “people are our most important asset” and that the “quality of our talent is the key differentiating factor” of our company? Most people reading this article would have to say “many times and often.” Truly successful companies do think that way and manage their human capital very well. It gets the proper attention at all management levels and in the boardroom. Boards today require a diverse group of directors with diverse industry and talent skill sets. Having a board of only generalists, regardless of how much successful experience they may have, no longer makes sense nor is it good corporate governance. Independent directors are a definite requirement of the audit and compensation committees as is the need for the proper skill sets of members of those committees. It now should seem apparent that HR is, and always will be, a necessary skill set for every board-level compensation or human resources committee.

Like the glass ceiling for women on boards many years ago which has been shattered, the glass ceiling on boards for HR executives is starting to crack as the best of the best HR executives are proving their worth on boards. Executive search firm recruiters who do board searches say that they are now recommending HR executives to their clients looking to fill board seats. However, their clients still mostly request CEO and CFO backgrounds unless the search involves filling multiple board seats for a company. In those cases, a diverse background of skills and industries is often explicitly sought, and people with HR backgrounds are being considered and nominated to boards.

There are a few notable examples in industry today where directors with HR experience and backgrounds are adding significant value to the boards they are serving on:

• William T. Conaty serves as a director of Hewitt Associates. Bill spent his entire career with General Electric Company and served as the Senior Vice President of Corporate Human Resources from 1993 to 2007. He was the architect behind many of GE’s widely recognized HR practices and has been a role model for turning HR organizations into strategic business partners. Russ Fradin, the CEO of Hewitt, said “Hewitt specifically wanted Bill on the board because of his HR background and that now he is making significant contributions to the board discussions and decisions.” The obvious place for HR executives to serve on boards will initially be for those companies like Hewitt who serve the HR industry. These will be HR consulting firms, as well as payroll, executive search, and training and development companies.

• Jill Kanin-Lovers serves as a director on the boards of Heidrick & Struggles International Inc., BearingPoint Inc., Dot Foods Inc., and First Advantage Corporation. Jill is the former Senior Vice President for Human Resources and Workplace management of Avon Products Inc. Prior to Avon she held senior HR positions at IBM and American Express. Jill is a real HR thought leader having over 50 publications on HR and teaching in executive programs at Rutgers.
• Michael A. Peel serves on the board of the Select Comfort Corporation and is on the board of directors and an officer of the Walker Art Center. Michael is currently Vice President for Human Resources and Administration at Yale University. Before moving to Yale, he was with General Mills as Senior Vice President of Worldwide Human Resources from 1991 to 2007.. Under his leadership, General Mills appeared on Fortune’s list of “100 Best Companies to Work For” six times since 1997.

These few examples point out that there are some executives with HR backgrounds qualified to serve on boards. The HR talent is out there and available to serve on boards and the Compensation Committees of boards. Good corporate governance demands the appointment of directors who bring special skill sets and competencies to a more independent and diverse board. As we see in the news everyday, in today’s difficult and highly competitive dynamic global business environment, people issues – from executive compensation and CEO development and succession to senior management recruitment and bench strength to company values and culture, provide ample agenda items for board discussions and decisions. The number of these people related issues at the board level is increasing.

There is definitely a growing trend (even if slight) of HR talent serving on boards.  This trend should increase and grow significantly in the near and long term future. It must be remembered that the people above and many more like them are basically business people first and HR experts second, having served on executive management and operating committees for a large part of their careers. This broad experience enables them to participate in the discussions and decisions on all topics which reach the board level, and not just the people related topics. They just happen to also have the experience and skill set to take a leadership role on the board for the most difficult and emotional topics the board has to deal with—those that require a lot of discussion where mistakes made are very costly and impact peoples lives – the people related issues. It is often effective management of these issues-and geting them right-that differentiates the best from the rest.

Bob Bogart is an HR executive currently working with Mullin associates as an executive coach and EVP of the firm. He previously worked for The Thomson Corporation as EVP, HR prior to the company’s acquisition of Reuters. He is also a volunteer of SCORE and counsels small business owners. He may be contacted at bob.bogart@yahoo.com.